All components of this story

In a report titled ‘Palm Oil’s Black Box’ and released on Monday, US-based non-government organisation Mighty and Gabonese NGO Brainforest alleged that Ollam...is failing to live up to industry-standard sustainability norms in two key areas, zero deforestation and supply chain transparency...Olam...released a statement vehemently refuting allegations that it has destroyed ecologically valuable forest for oil palm development, and reiterating the role of its operations in alleviating poverty and promoting development in the Central African country...The report, which was produced through supply chain analysis and on-the-ground investigations, alleged that the company has cleared some 20,000 hectares of rainforest in Gabon since 2012, in order to set up Africa’s largest palm oil plantations. These forests are home to threatened keystone species such as gorillas, chimpanzees, and elephants...In its response, Olam maintained that all plantation development in Gabon had taken place on degraded forest land, or savannah landscapes—not pristine rainforest. It insisted that areas for land clearing had been identified in conjunction with local communities, NGOs and experts. Sunny Verghese, Olam’s co-founder and group chief executive officer of Olam International, added: “Gabon has a right and an essential need to develop its agriculture sector to diversify its economy, improve food security to feed its people and create new livelihood opportunities, while also protecting its natural forests.” Olam’s work in Gabon contributes to each of these objectives, said Verghese. While the company has developed some 44,000 hectares of plantations in the country to date, it has also conserved 55,000 hectares of land with a high conservation value, and taken measures such as building wildlife corridors in these areas, he added.

Investigation shows how Olam, owned by Singapore’s national wealth fund, is driving rainforest destruction from Gabon to Indonesia...A new report released today by Mighty and Gabon-based NGO Brainforest reveals that Olam, one of the world’s leading agribusiness traders, is operating a secretive palm oil trading operation. It finds that Olam is creating a market for deforestation-linked palm oil, and then funneling it to some of the world’s best known brands that have touted their own strong sustainability policies. Olam is majority owned by Singapore’s national wealth fund, Temasek...“Olam is operating a giant ‘black box’ of palm oil from unknown sources,” said Etelle Higonnet, Campaign and Legal Director at Mighty. “Unlike its more responsible competitors, Olam gives its suppliers until 2020 to comply with its sustainability requirements. That’s like waving a green flag at rogue palm oil companies telling them to get as much deforestation as possible done now–before the deadline.”...The analysis found that Olam cleared approximately 20,000 hectares of forest across its four concessions since 2012...“Olam broadcasts that it is a sustainability leader to the world, but that is far from the reality in Gabon,” said Marc Ona Essangui, founder of the environmental NGO Brainforest and Goldman Award Winner. “After fighting for years, we hope this report will finally spur action by Olam to truly adopt industry best practices to protect the forest homes of our communities and precious wildlife.”...Unsustainable palm oil production in Indonesia caused rampant forest fires, leading to thick haze that blanketed the entire Southeast Asian region in 2015. Singapore was particularly affected by the haze. Schools were closed, flights were cancelled, and tens of thousands sought medical attention. An estimated 2,200 premature deaths occurred in the nation as a result. Ironically, through Temasek’s investments in Olam, the people of Singapore have unwittingly financed what is likely one of the world’s largest “black boxes” for the kind of unsustainably produced palm oil that led to this haze crisis.

Olam International...has hit back against a report by a US-based environmental lobbying group accusing it of endangering the forest habitats of African wildlife with widespread deforestation in its palm oil concessions in Gabon...Olam said the report...has important factual errors, and several key misinterpretations of Olam's policies and implementation...Olam said the Mighty Report levels two main claims against the company: - That Olam is deforesting in Gabon and will not sign a no-deforestation commitment that adheres to the High Carbon Stock Approach (HCSA) methodology.- That Olam's third party sourcing of palm oil comes from companies that are environmentally destructive and causing fire and haze. On the deforestation claim, Mr Sunny Verghese, Olam's co-founder and group CEO said: "Gabon has a right and an essential need to develop its agriculture sector to diversify its economy, improve food security to feed its people and create new livelihood opportunities, while also protecting its natural forests. "Olam's palm plantations in Gabon are being developed in an environmentally and socially responsible way to contribute to each of these objectives. Our approach balances palm plantation establishment with natural forest protection. In fact we are conserving and protecting areas of verified high conservation value forest within our concessions greater in size than our plantations." Olam added that Gabon has about 33 per cent of its people living at or below the poverty line, and its reliance on oil-and-gas revenues is not viable in the long-term. "The government therefore has a justifiable imperative to grow the agricultural economy beyond just subsistence farming. Its medium-term goal is to establish 300,000 hectares of agriculture, which will amount to about 1 per cent of Gabon's total national land area," said Olam...On the second claim that Olam has failed to disclose the identity of third-party suppliers of palm oil, Mr Verghese said the company is "still a small player, accounting for only 0.4 per cent of global palm volumes in 2016". He added: "We already expect full compliance to our Sustainable Palm Oil Policy and Supplier Code, and have absolutely zero tolerance for the burning of forests. All of our current suppliers have either signed this code or have their own codes consistent with ours. We are also now releasing our full supplier list."

Gabon palm operations: Environmentally sustainable and socially responsible; Helping to meet Gabon’s essential development imperative; Third-party palm oil sourcing: Currently a small player involved in 0.4% of global volumes in 2016; Rigorous sourcing from no burn, no peat, no deforestation compliant suppliers; Explicit requirement being added on no exploitation; Supply chain transparency: High standards across supply chain of all commodities; Full list of palm suppliers released... We have been made aware of a report that will be released on our palm operations. In recent months we have responded to questions from the US-based communications and lobbying company, Waxman Strategies, working as Mighty Earth (Mighty) and with Brainforest, a Gabon-based NGO. We appreciate the vital role played by NGOs and civil society to keep the industry in check and working in partnership to drive best practice. The Mighty Earth report acknowledges some of Olam’s responses, especially where the authors feel progress has been made. The report has also provided a series of recommendations, some of which we will take on board. However, we are disappointed to see some important factual errors, and several key misinterpretations of Olam’s policies and implementation. Considerably more fundamental though, is the basic principle of how Mighty views a country like Gabon and its sovereign right to develop sustainably, with the assistance of a responsible company, in a Public Private Partnership arrangement...Sunny Verghese, Co-Founder and Group CEO of Olam International said: “Gabon has a right and an essential need to develop its agriculture sector to diversify its economy, improve food security to feed its people and create new livelihood opportunities, while also protecting its natural forests. Olam’s palm plantations in Gabon are being developed in an environmentally and socially responsible way to contribute to each of these objectives. Our approach balances palm plantation establishment with natural forest protection. In fact we are conserving and protecting areas of verified high conservation value forest within our concessions greater in size than our plantations. For our third party palm sourcing, we are still a small player, accounting for only 0.4% of global palm volumes in 2016. We already expect full compliance to our Sustainable Palm Oil Policy and Supplier Code, and have absolutely zero tolerance for the burning of forests. All of our current suppliers have either signed this code or have their own codes consistent with ours. We are also now releasing our full supplier list.”

Third-party palm oil sourcing: Currently a small player involved in 0.4% of global volumes in 2016; Rigorous sourcing from no burn, no peat, no deforestation compliant suppliers; Explicit requirement being added on no exploitation

Supply chain transparency: High standards across supply chain of all commodities; Full list of palm suppliers released2

Palm oil giant Olam has been accused of using suppliers that may use unsustainable practices in parts of Southeast Asia. The claims against the agricultural commodities trader were made in a report by Mighty... Mighty also accuses Olam and its main stakeholder, Singapore state-owned investment company Temasek, of turning a blind eye to these practices. Both companies reject the allegations. Singapore and Malaysia regularly suffer from haze caused by slash-and-burn practices by small-scale farmers and rogue palm oil traders in Indonesia...Singapore-based Olam has confirmed that it buys 99% of its palm oil from third party suppliers and while it is a relative newcomer to the industry, it says it accounts for less than 1% of the global market. Mighty's report says Olam and Temasek could be unwittingly encouraging unsustainable palm oil trading practices that may contribute to the haze that is caused by the fires. It also says Olam created a "secretive market for rogue palm oil companies" that allowed the vast majority of its product to be bought from unknown sources...But Olam chief executive Sunny Verghese told the BBC that the firm had a "very vigorous sourcing policy and we insist that there is zero tolerance for burning, so it's a 'no burn-no peat-no deforestation' compliance policy". The company only agreed to release the names of its 14 suppliers on Monday, having previously resisted calls by Mighty to do so. Mr Verghese said he believed the firm's current suppliers all met Olam's strict requirements, but added that the vetting and verification process would take several more years to complete. He added that producers who do not comply with the company's sustainable principles would be removed from its supply chain.

...Olam failed to publicly disclose the names of its suppliers, the locations of its mills, or any information about supplier performance on sustainability, creating a massive black box that could be hiding deforestation, peatland clearance, and human rights abuses in its supply chain. Moreover, Olam’s deadline for supplier compliance with its palm oil sustainability policies isn’t until 2020, which could have the perverse incentive of creating amongst its suppliers a race to deforest for up to four more years...since March 2012, Olam has cleared around 19,000ha of forests within Olam’s oil palm concessions in Gabon...Olam needs to guarantee transparency in its supply chain, immediately require its suppliers to comply with its sustainability policies, and embrace a strong ‘No Deforestation, No Peat and No Exploitation’ (NDPE) commitment that adheres to the HCSA methodology...Olam has more than 16,000 global customers, and names Pepsico, KraftHeinz, ConAgra, Unilever, Mondelez, and Nestlé among them, meaning that these companies are tied to Olam’s efforts to undermine sustainability progress in the palm oil industry...In 2015 alone, more than two million hectares of Indonesian forest and peatland went up in smoke, due in significant measure to purposeful burning to clear land for palm oil and paper plantations...69 million people across the region were exposed to toxic haze as a result of last year’s devastating wildfires in Indonesia; an estimated half a million people in Indonesia sought medical care because of haze and Singapore recorded over 77,000 visits to clinics and polyclinics for haze-related ailments. Harvard and Columbia scientists recently estimated that 100,300 people likely died prematurely as a result of inhaling smoke particles from the 2015 toxic haze emanating from Indonesia’s vast forest and peat fires. In Singapore specifically, they estimated 2,200 premature deaths occurred...Olam’s principal bankers include Australia and New Zealand Banking Group Limited, BNP Paribas, Natixis, Commerzbank AG, Credit Suisse Group, JPMorgan Chase Bank, The Bank of Tokyo-Mitsubishi UFJ, Ltd, among others. Those providing Olam with loans for its Gabon palm oil operations include: Ecobank, Afreximbank, BGFI Bank Gabon and the Central African State Development Bank (BDEAC). Many of these banks have committed to environmental and social responsibility, and in some cases, forest protection. Mitsubishi Corporation is the second largest shareholder, and the World Bank’s International Finance Corporation (IFC) has an equity stake, while Norway’s pension fund (Norges Bank Investment Management or NBIM) holds shares in Olam...In Gabon, Olam is by far the major palm industry player, and is operating in an area at high risk of deforestation, characterized by corruption, lack of a free press, weak civil society, and poor governance...Olam has entered into two separate joint ventures with...Gabon to develop its palm oil business...Olam received a 16-year income tax holiday beginning in Fiscal Year 2011...and a 300,000 ha pledged landbank from Gabon..15,659 Gabonese have been enrolled in the GRAINE scheme, each of whom will receive approximately seven hectares and who will then sell their oil palm harvests...to Olam...the program will be rolled out in nine provinces and aims to cover a total of 200,000 ha with 30,000 participants across 1,600 villages by 2020. [Refers to SIFCA Group, Acacia Investments, Felda Global Ventures Holdings Berhad (FGV), Cargill, Sime Darby, Olam Rubber Gabon SA, Outspan Bolovens Limited (a subsidiary of Olam],

Olam’s operations are properly matters for the board and management of Olam to address. As a matter of proper governance, Temasek does not direct the business operations of our portfolio companies, including Olam. We have stated openly and in many forums, that we fully support no burn policies for land clearance, and would urge oil palm companies and plantation owners to do the same. Haze from large scale fires, and the fires themselves whether deliberate or natural, are a major health hazard, and may have long term implications. Hence, it is important that all players, individuals, companies and governments, work together to prevent, minimize and mitigate such risks to people and our environment.

Site tools

Follow us

Disclaimer: Business & Human Rights Resource Centre and its collaborative partners take no position on the diverse views presented in linked material by the various commentators, organizations & companies. As with any database, we cannot guarantee the factual accuracy of all the articles & reports we make available.

By continuing to use the site, you agree to the use of cookies. more information

/*

/*

/*

The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.